The new quota is for 23.79 million tonnes of oil products the sources said. The increase reflects the start up this year of a new privately owned refinery that will add to China’s fuel surplus as record refinery output is exceeding fuel demand growth.

The quotas, issued by the Ministry of Commerce, are for 9.09 million tonnes of gasoline, 9.175 million tonnes of diesel and 5.525 million tonnes of jet fuel, the two sources said.

The gasoline allocation is nearly double the 5.19 million tonnes granted in the first batch, issued in December. Then, the government issued a quota of 8.7 million tonnes for diesel and 4.47 million tonnes of kerosene.

“China’s diesel demand improved on growing activities in heavy industries...Gasoline demand on the other hand did not, and inventory is high,” said a Singapore-based trader who follows Chinese fuel exports closely.

More refining is coming online as privately held Hengli Petrochemical Co Ltd brings its new plant, able to process 400,000 barrels per day of crude, to full capacity later this month.

Hengli was not granted a quota in this batch meaning its refinery output must be consumed in China.

Instead, all of the quotas were issued to state oil companies, including China National Petroleum Corp (CNPC), China Petroleum and Chemical Corp (Sinopec), China National Offshore Oil Corp (CNOOC), Sinochem Corp and China National Aviation Fuel, the sources said.

CNPC was allotted 4.7 million tonnes of gasoline permits, or 52 percent of the total, and Sinopec was given 5.52 million tonnes of diesel permits, or 60 percent of the total.

The second batch of quotas, which will be valid until the end of the year, brings the total so far for 2019 to 42.15 million tonnes.

The quotas will also fall under the category of general trade, under which refiners will receive tax refunds for exports of fuel products, the sources said.

A third batch of quotas is expected around September or October, said one of the sources.